Thornburg needs more time to file 10-Q, seeks extension of preferred exchange escrow agreement

By Caroline Salls

Pittsburgh, June 2 - Thornburg Mortgage, Inc. will need more time to file its first-quarter 10-Q, according to a company news release.

Although the company originally said it expected to release the earnings and file the 10-Q by June 2, Thornburg said it now expects to file its 10-Q and issue an earnings release by June 12.

In order to finalize its 10-Q, Thornburg said it must complete its valuation analysis and the accounting for a March 31 senior subordinated secured note transaction, which requires a comprehensive probability weighted valuation assessment of the notes, the various categories of warrants and a related principal participation agreement.

The company said the valuation analysis will determine the original issue discount on the senior subordinated notes and will have an impact on Thornburg's GAAP and tax accounting reports going forward.

Thornburg said its delay in filing its 10-Q impacts the timing of several other pending transactions, as well as the filing of the prospectus supplements for the registration of resales of senior subordinated notes and common stock issued upon exercise of warrants or the filing of the registration statement related to the previously announced exchange offer for the company's preferred stock.

In light of these delays, and the likelihood of a Securities and Exchange Commission review and comment on the exchange offer documents, the company said it is requesting a 90-day extension of the escrow agreement for the preferred stock exchange offer to Sept. 30.

Thornburg said this extension would allow the $200 million currently held in escrow to be maintained to fund the exchange offer.

Under the escrow agreement, the company needs each investor's consent to retain its funds in escrow, and Thornburg said it has begun the process of obtaining these consents.

NYSE noncompliance notice

In addition, Thornburg said it has received a letter from the New York Stock Exchange notifying the company that it is not in compliance with the NYSE's continued listing criteria because the average closing price of Thornburg's common stock has been less than $1.00 for 30 consecutive trading days.

If the deficiency is not cured within six months, the company's common stock will be subject to suspension and delisting procedures.

Thornburg said it intends to cure the deficiency by implementing a reverse stock split.

Thornburg is a Santa Fe, N.M., lender specializing in jumbo mortgages.

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